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Daniel Morgan was murdered in 1987 but no-one has ever been found guilty

A judicial inquiry has not been ruled out into the murder of a private investigator from Monmouthshire 25 years ago, says the UK government.

MP Tom Watson wants Daniel Morgan's 1987 death in south London to be examined by the Leveson inquiry into media standards.

The case against four men charged with murder collapsed in March 2010.

Policing Minister Nick Herbert said such an inquiry had limitations, but in a Commons debate did not rule it out.

He said Home Secretary Theresa May was still considering whether to order one, but other investigations might be more appropriate.

Mr Herbert suggested a QC could oversee an inquiry by a police force from outside London.

The Morgan family have said they have no trust in the Metropolitan Police and do not want the police to investigate themselves.

The family have again called for a judicial inquiry into police handling of the case.

The Leveson inquiry was told a senior officer on the case was placed under surveillance by the News of the World.

Mr Morgan, 37, originally from Llanfrechfa, near Cwmbran, was found with an axe in his head in a south London pub car park in 1987.

Email hacking

The murder has been investigated on five separate occasions but no-one has ever been convicted.

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Alastair Morgan said police did not believe anyone would ever be convicted for his brother's murder

Until his death Mr Morgan worked with Jonathan Rees, whose company Southern Investigations has been linked to alleged email hacking.

Mr Rees was one of five men accused of murdering Mr Morgan in 2008, but after almost two years of legal wrangling, the trial collapsed in March 2010 when "supergrass" evidence was deemed to be unreliable.

Mr Morgan's brother Alastair told BBC Radio Wales a judicial inquiry would help answer some of the family's questions about police failings over the case.

He said: "The police and the Crown Prosecution Service have told us there is no realistic possibility of anyone being convicted of Daniel's murder.

"We've been expressing concern over a number of the investigations over many many years, so the only way forward we can now see is a judicial inquiry.

"Six years ago they [police] reopened the investigation when we were calling for a judicial inquiry at that point.

"We were extremely sceptical about the possibilities of a conviction but our hopes were raised and ultimately dashed."

The murder of Mr Morgan was raised at the Leveson inquiry into media standards and ethics on Tuesday in evidence from former Metropolitan Police detective and BBC Crimewatch presenter Jacqui Hames.

Press links

She told the inquiry that she and her husband, Det Chief Supt Dave Cook, were placed under surveillance by the News of the World after he appeared on Crimewatch seeking information about Mr Morgan's murder.

Ms Hames told the inquiry that Southern Investigations had "close links" to Alex Marunchak, the newspaper's crime editor in the late 1980s.

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Jacqui Hames said she was put under surveillance by reporters

In a statement, she said: "I believe that the real reason for the News of the World placing us under surveillance was that suspects in the Daniel Morgan murder inquiry were using their association with a powerful and well-resourced newspaper to try to intimidate us and so attempt to subvert the investigation."

Alastair Morgan said his family believed they too had been placed under surveillance following a critical development in the case in 1998.

"I was living in Scotland at the time, my partner was doing a journalism course in Scotland, my mother was in Wales, my sister was in Germany, and over the same weekend we all noticed very strange activities around our homes," he said.

"My mother was photographed, my sister was photographed.

"Last year I wrote to [News International chairman] James Murdoch asking him to investigate this. I haven't even received a reply to my letter."

News International said it had "no comment" to make on Ms Hames's statement to the Leveson inquiry.